The S&P500 Takes Higher P/E ratio


The pandemic still shows no slowdown, and the US stock prices exceed their normal market value. So investors are expecting an economic rebound or an asset price bubble.

The S&P 500 technology sector trades at a higher price-to-earnings ratio after a 15 percent annual increase: compared to its historical mediate figure, it’s 26.4 times more.

The investors’ opinion over the current market situation is split. One part is convinced that it will give incentives to the reopening economy; others believe that the market is overvalued and will eventually lead to a bubble burst.

Chief investment officer at Greenwood Capital, Walter Todd, states that the stock valuation in specific markets is experiencing rapid growth and calls it a “bubble.”

The S&P 500 was seriously behind in March but skyrocketed to 66 percent, hitting a record high on Thursday 17, 2020. Jobless claims in the US climbed significantly.

Some experts are skeptical about Tesla hitting $680 billion in value as it shares an extended meteoric rally with its six times stock gain this year. Bitcoin increased by $23,000, reaching a record high – “massive bubble.”

At the same time, fund managers looking for stocks reduced cash level to the point that it caused a “sell” signal for equities in the bank’s model, the BofAML Global Research survey reported this week.

According to Keith Lerner, the chief market strategist’s at Trust Advisory Services; the equity risk premium prefers stocks over bonds. The findings are based on the data comparison of yearnings yield stocks to the yield of the US. 10-year Treasury note. He also added that when historically the equity risk premium reaches the current level, the S&P 500 has outpaced the 10-year Treasury note by 10.3 percent in the subsequent 12 months.

Lerner says that those who think that the market is overvalued and those who see it in terms of relative values are correct.

According to JPMorgan (NYSE: JPM) Private Bank, equities attract much interest due to their high dividends, earnings, and cash flow yields, unlike fixed-income products.

Bitcoin’s value at the moment is $23,770. It looks like the most popular cryptocurrency has exceeded the psychological barrier of $20,000 bullish trade on December 16, 2020.